Signs of a Strong Financial Team
Integrate back-end systems into your financial system
At a minimum , your enterprise resource planning ( ERP ) system should speak to your financial system as often as the ERP system has the data needed to integrate and produce accurate financials . Several companies will use the data in the ERP system to book manual journal entries into the financial system or book of records , which can be extremely time consuming and subject to human error . If the integration cost is not too expensive , and there is time to do it , ensuring your ERP system feeds realtime data directly into your financial system at least daily , or if possible , multiple times a day , can improve efficiency as well as accuracy of information .
Conduct a financial statement review or audit
If you are considering a sale or seeking financing from a lender , have a financial statement review or audit completed . These can help you better understand your bottom line , make more informed business decisions and enhance your credibility as a well-managed business . Due to higher interest rates over the past few years , banks have tightened their lending practices , requiring businesses seeking financing to conduct an annual review or audit for consideration . Many potential buyers are also requiring this as they evaluate potential sellers . With an annual audit or review , it will not only help with financing and getting to a sale , but it will also help you evaluate and ensure your books are clean and in compliance with GAAP .
Whether or not a business sale is part of your strategic objectives , maintaining clean financial records should always be prioritized to ensure your business is running efficiently . Our advisors can help you assess your current financial processes , as well as offer recommendations and help implement best practices based on your industry and business situation . To obtain assistance , contact us today
Signs of a Strong Financial Team
A company with a strong accounting / finance team will have the following in place :
• Proper controls , processes and procedures .
• Clear roles and responsibilities defined within the
group . Your accounting / finance team should also be cross-trained on roles and responsibilities .
• Timely month-end closes . Books should be closed within five to 10 days after month-end .
• Reconciliations for all balance sheet accounts within your organization , at a minimum .
• Annual budgets at the departmental level with monthly reviews , ideally with department heads , on an actual versus budget basis .
• A proper chart of accounts that allows a reader of the financial statements to quickly understand the key products , departments , divisions and key metrics of the company .
• Financials in compliance with GAAP and on an accrual basis .
• Proper treasury management , including cash-flow management and financing arrangements with banks .
About the Author
TIM HOOVER , CPA , MBA
DIRECTOR OF FINANCIAL CONSULTING thoover @ doeren . com
Bringing more than 20 years of private and public accounting experience , Tim provides finance and accounting solutions to help middle market businesses streamline finance operations and grow strategically .
VIEWPOINTS : ISSUE 2 2024 | 05